Gold rises, concerns over US fiscal policy cap USD gains

• Gold prices climb as US fiscal concerns over Trump’s proposed tax bill support bullion gains.
• Fed Chair Powell comments on monetary policy at the ECB Forum, maintaining a data-dependent stance.
• XAU/USD trades near $3,350 after US ISM and JOTS data beat estimates, raising expectations for a September rate cut.

Gold prices are rallying on Tuesday as traders digest remarks from policymakers currently gathered at the European Central Bank (ECB) forum in Portugal.

Focus has been on comments from Federal Reserve Chairman Jerome Powell, who has been facing increasing pressure from US President Donald Trump to reduce interest rates in July.

Despite Fed Chair Powell’s hawkish comments and better-than-expected US economic data, which have helped limit US Dollar losses, XAU/USD continues to trade around $3,350 at the time of writing.

Fed Powell’s comments included, “As long as the US economy is in solid shape, we think that the prudent thing to do is to wait and learn more and see what those effects might be.”

So far, Powell has adhered to the cautious script, but investors are aware that this could shift quickly if the data dictates otherwise.

Additionally, Powell stated that “It’s going to depend on the data, and we are going meeting by meeting,” Powell said. “I wouldn’t take any meeting off the table or put it directly on the table. It’s going to depend on how the data evolve.”

These comments suggest that the Fed is not rushing to cut rates, increasing the potential for a September cut. With the US ISM Manufacturing and JOLTs data beating expectations, a resilient US data remains supportive of a more data-dependent Fed, limiting US Dollar losses.

Global policymakers gather at the ECB forum, a key event for Gold

The focus on Tuesday was on the European Central Bank (ECB) Forum on Central Banking, currently underway in Sintra, Portugal. This rare convergence of the world’s top central bankers offers a critical opportunity for markets to assess the direction of global monetary policy.

ECB President Christine Lagarde, Bank of Japan (BoJ) Governor Kazuo Ueda, Bank of England Governor Andrew Bailey, and Federal Reserve Chair Jerome Powell are currently speaking on monetary policy.

The joint appearance is more than symbolic. Previous Forums have triggered coordinated messaging or revealed stark divergences in policy outlooks that have moved major asset classes, including Gold, currencies, and bonds.

With central banks navigating a delicate balance between inflation control and slowing growth, any nuance in today’s remarks could set the tone for the third quarter. 

Gold daily digest market movers: XAU/USD rallies on monetary, fiscal, tariff concerns

• The ISM Manufacturing PMI is expected to print at 48.8 for June. The June data came in above expectations at 49, rising from 48.5 in May. 
• Job Openings and Labor Turnover Survey (JOLTS), where economists had expected around 7.3 million open positions as of May 31. Instead, the latest report revealed that job vacancies rose by 7.769 million, reflecting a resilient US labour market.
• President Donald Trump’s escalating criticism of Powell, including another sharply worded post on Truth Social on Monday, has raised concerns about the Fed’s independence. 
• Trump’s post read, “Jerome – You are, as usual, ‘too late.’ You have cost the USA a fortune – and continue to do so – you should lower the rate by a lot!” 
• The rhetoric has fueled speculation that Powell may either shift his tone or face replacement. 
• That prospect has pressured real yields lower and driven fresh demand for Gold as a hedge against policy uncertainty and US Dollar weakness. 
• President Trump issued a handwritten note with his signature to Fed Powell on Monday. The letter said that “Hundreds of billions of dollars are being lost! No inflation”. 
• Many now expect a shift toward looser monetary policy, which is putting downward pressure on real yields and making Gold more attractive.
• At the same time, the Trump administration’s proposed “Big Beautiful Bill,” with its estimated $3.3 trillion impact on the deficit, is sparking fears over long-term fiscal health. 
• The bill has drawn fire from across the political spectrum, including from Elon Musk and several Democratic leaders, who warn it could lead to inflation and a weaker US Dollar. Such a backdrop often prompts investors to turn to Gold as a hedge against instability and currency depreciation. The Senate is currently pushing to have the bill approved by Friday.
• With a July 9 tariff deadline fast approaching, the US is focusing on smaller, step-by-step trade deals rather than sweeping agreements, aiming to avoid triggering new tariffs. 
• While partial progress has been made with countries like the UK and China, talks with Japan and the European Union are still unsettled. The EU has shown openness to a blanket 10% tariff but is pushing for exceptions in sensitive sectors such as semiconductors and pharmaceuticals. 
• Meanwhile, President Trump has taken aim at Japan’s trade approach, especially on rice, warning that new tariffs may be imposed if no deal is reached in time.
• Trump expressed his frustration on Monday following a dispute over Japan’s reluctance to import rice from the US, which resulted in the US President stating that Japan has been “spoiled with respect to the United States of America.”
• All of this contributes to an environment where Gold looks relatively safe. Add to that the possibility of technical breakouts and increased buying interest, and it’s no surprise prices are pushing higher.

Gold technical analysis: XAU/USD bounces off trendline support, opening the potential for a retest of $3,400

After falling to trendline support from the January low on Monday, failure to gain traction below $3,250 allowed bulls to regain control of the imminent trend. With the 50-day Simple Moving Average (SMA) currently providing support for the yellow metal at $3,320, XAU/USD is now threatening a break of the 20-day SMA at $3,351. The 23.6% Fibonacci retracement of the April low-high move provides an additional barrier of resistance near $3,371.

The Relative Strength Index (RSI) is currently at 52, rising back above the neutral zone and pointing higher. This suggests a modest bullish bias. With the Gold price threatening the 20-day SMA, a clear break of $3,351 and a move above $3,371 could see prices retest the major psychological level of $3,400.

Gold (XAU/USD) daily chart

If bullish momentum fades and prices slip below $3,300, the 38.2% Fibo level could come into play at $3,292, with a deeper pullback driving Gold to the midpoint of the April move at $3,328.